China Q2 GDP: A semblance of stability - Westpac

Elliot Clarke, Research Analyst at Westpac, explains that despite challenging circumstances, China’s economy continues to grow at a robust pace, benefitting the nation broadly, but particularly households.

Key Quotes

“Annual growth was in line with the market’s expectation at 6.7%. In keeping with the ‘quality growth’ focus (which, in large part, is about improving consumers living standards), consumption was the key support for growth. In year-to-date terms, consumption added 5.3ppts to annual growth at June.”

“There was nothing particularly out of place in the other GDP detail. Nominal GDP growth slowed more sharply, but this was from a higher starting point than the constant price series – 10.2%yr to 9.8%yr.”

“Using first half growth as a benchmark for 2018 overall, an average of 1.6% equates to 6.4% annualised, a tick below authorities’ target of 6.5% for 2018. On the partial data to hand, an acceleration in the second half seems highly unlikely. Hence the risks to the authorities' target are skewed downward.”

“We remain comfortable with our sub-consensus 6.3% forecast for 2018.”